Statement on Signing the Urgent Supplemental Appropriations Act, 1986

July 2, 1986

I have today signed H.R. 4515, the Urgent Supplemental Appropriations Act, 1986. The act provides urgently needed funds for the Commodity Credit Corporation, the Internal Revenue Service, Federal courts, disaster relief, and a number of other domestic programs, and for the enhancement of embassy security, as well as assistance for the Philippines and Ireland. The act also increases the mortgage loan insurance commitment limitation to accommodate the increased demand for Federal Housing Administration mortgage insurance.

Two aspects of the act are particularly gratifying:

-- It is the last supplemental appropriations bill for fiscal year 1986 that I expect to be asked to sign.

-- By the standards of past supplemental bills, H.R. 4515 is notably restrained. The restraint it reflects is attributable in large part to the efforts of the leadership of the House and Senate Appropriations Committees.

H.R. 4515 specifies that certain loans held by the Federal Financing Bank and guaranteed by the Rural Electrification Administration could be prepaid without payment of the normal premium charged by the Federal Financing Bank. This provision was substantially improved in conference and later on the House and Senate floors by significantly reducing the number of utilities that can qualify for prepayment without the normal premium.

In signing this bill, I am assured that the prepayment provision is intended to be targeted carefully to assist only those REA guaranteed borrowers most in need of this form of financial assistance. It is my further understanding that regulations will be issued to establish conditions and criteria that will be formulated to ensure that such prepayment benefits have no adverse effect on the Federal Financing Bank and are extended only to the most financially troubled borrowers.

Without the important changes that were made in the conference and on the House and Senate floors that limited the application of this provision, I would not have signed this bill into law. However, there are several provisions in the bill that continue to be objectionable and that infringe on the executive branch's ability to administer and regulate Federal programs, particularly:

-- Section 208 prohibits the Federal Government from soliciting or studying any proposals to sell the Tennessee Valley Authority or the Federal Power Marketing Administrations (PMA) without specific congressional authorization. This ban on studying a valid proposal is an unreasonable restriction on the executive branch and closes off a major recommendation of the Grace commission. I continue to believe that the proposal to sell the PMA's should be pursued.

-- Section 206 bans for 1 year replacing the open-ended inflationary system for paying Medicare hospital capital with a prospective, fixed-price system. Without reform, this ban would increase outlays by at least $1 billion in FY's 1987 - 89 and continue to distort incentives for efficient hospital operation.

I am signing this bill into law with the further understanding that section 204 of title II restricts the use of appropriated funds only in connection with the preparation, promulgation, or implementation of new regulations of the type described in that section and in no other way restricts the ability of the executive branch to administer the program referred to therein, by Executive order, by implementation of existing regulations, or otherwise.